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High-flying Chinese shares took a dramatic tumble overnight, three more Canadian banks have reported better-than-expected quarterly earnings, and the semiconductor sector has just seen its biggest takeover deal in history.
While certainly a busy morning in global markets, stock futures for the major U.S. and Canadian indexes are just slightly lower, suggesting limited turmoil at home later today.
CIBC posted fiscal second-quarter adjusted profit of $2.28 a share, beating the Street consensus of $2.23. It also raised its dividend by 2.8 per cent to $1.09 a share. Toronto Dominion Bank reported adjusted profit of $1.14 a share, beating the $1.11 average estimate of analysts. Royal Bank of Canada also beat Street views.
This followed Bank of Montreal and National Bank beating Street expectations on Wednesday - meaning not a single major Canadian bank so far has disappointed the Street on the bottom line. Canadian financial stocks should have a good day today on the TSX.
It wasn't a good day in China, which had been one of the world's top-performing stock markets this year. Shares in Shanghai plunged 6.5 per cent, their biggest fall since January - although it follows a 50 per cent surge since March. Fears over tighter requirements on margin financing was said to ignite the selloff, which in turn triggered fears of further regulatory steps to reduce leverage in the red-hot market. Next week will also see more than 20 initial public stock offerings by new companies.
The big M&A news today: Avago Technologies has agreed to buy fellow chipmaker Broadcom Corp in a cash-and-stock deal valued at $37- billion (U.S.). Avago, which makes chips for the wireless and industrial markets, is offering Broadcom shareholders $17 billion in cash and Avago shares valued at $20 billion.
European markets are mostly lower as traders there await the results of talks on a reforms-for-aid deal for Greece and its lenders. A European Commission official today suggested such a deal was still not imminent - although traders are largely positioned for a successful outcome that should keep Greece in the euro zone.
Now, here's a closer look at what's going on this morning and what is still to come.
Futures:
S&P 500 -0.2 per cent; Dow -0.3 per cent; Nasdaq -0.2 per cent
Equities:
Hong Kong's Hang Seng -2.23 per cent
Shanghai composite index -6.51 per cent
Japan's Nikkei +0.38 per cent
London's FTSE 100 +0.18 per cent
Germany's DAX -0.34 per cent
France's CAC 40 -0.49 per cent
Stoxx 600 -0.22 per cent
Commodities:
WTI crude oil (Nymex Jly) +0.17 per cent at $57.61 (U.S.) a barrel
Gold (Comex Aug) +0.13 per cent at $1,188.00 (U.S.) an ounce
Copper (Comex Jul) -0.05 per cent at $2.77 (U.S.) a pound
Currencies:
Canadian dollar at 80.06 (U.S.), down 0.0024
U.S. dollar index -0.17 at 97.19
Bonds:
U.S. 10-year Treasury yield 2.14 per cent, +0.007
ECONOMIC INDICATORS:
Canada current account deficit for the first quarter was $17.5-billion versus expectations for $18.5-billion.
Canada industrial product price index for April contracted 0.9 per cent versus expectations for contraction of 0.1 per cent.
U.S. initial jobless claims for week of May 23 was 282,000, more than the 270,000 that was expected.
(10 a.m. ET) U.S. pending home sales for April. Consensus is an increase of 0.9 per cent from March.
MARKET EVENTS:
(11 a.m ET) EIA Petroleum Status Report.
G7 finance chiefs meet in Dresden.
STOCKS TO WATCH:
CIBC posted fiscal second-quarter adjusted profit of $2.28 a share, beating the Street consensus of $2.23. It also raised its dividend by 2.8 per cent to $1.09 a share.
Toronto Dominion Bank reported adjusted profit of $1.14 a share, beating the $1.11 average estimate of analysts.
Royal Bank of Canada also beat Street views. Adjusted EPS was $1.61 vs. the Street estimate of $1.60.
Avago Technologies has agreed to buy fellow chipmaker Broadcom Corp in a cash-and-stock deal valued at $37- billion (U.S.). Avago, which makes chips for the wireless and industrial markets, is offering Broadcom shareholders $17 billion in cash and Avago shares valued at $20 billion. Broadcom shares are nearly unchanged in the premarket, as shares spiked 21 per cent on Wednesday after media reports emerged that the deal was imminent.
Heroux-Devtek reported Q4 adjusted EPS of 21 cents vs. the expected 19 cents.
Other earnings today include: Abercrombie & Fitch Co.; Descartes Systems; Flowers Foods Inc.; GameStop Corp.; Orbital ATK Inc.; Seadrill Ltd.; Splunk Inc.
GoPro Inc. climbed 3 per cent after Chief Executive Officer Nick Woodman said the camera manufacturer is working on a drone product that is scheduled for release in the first half of 2016.
ANALYST ACTIONS:
Canaccord Genuity downgraded Magnum Hunter Resources to "hold" from "buy" and cut its price target to $2 (U.S.) from $3.
National Bank Financial downgraded BRP Inc. to "sector perform." The price target is $28 (Canadian).
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With files from wire services
Darcy Keith